Obama bundler tied to Chinese government?

posted at 10:01 am on October 8, 2012 by Ed Morrissey

Most Republicans recall the Doodad Pro controversy from almost exactly four years ago, where Team Obama campaign websites turned off credit card security checks that allowed fraudulent and foreign donations to flow into the campaign. Could that be happening again? According to a new independent report from the Government Accountability Institute and reported by Breitbart, not only is it actually happening again — it’s actually gotten worse. A bundler for Barack Obama has set up a shady website operation to collect donations to the campaign, but it’s based in Shanghai, and the bundler has ties to the Chinese government:

Breitbart News obtained an advance copy of the bombshell report which reveals that the Obama.com website is not owned by the president’s campaign but rather by Obama bundler Robert Roche, a U.S. citizen living in Shanghai, China. Roche is the chairman of a Chinese infomercial company, Acorn International, with ties to state-controlled banks that allow it to “gain revenue through credit card transactions with Chinese banks.”

There’s more.

The unusual Obama.com website redirects traffic directly to a donation page on the Obama campaign’s official website, my.barackobama.com, which does not require donors tob enter their credit card security code (known as the CVV code), thereby increasing the likelihood of foreign or fraudulent donations. The website is managed by a small web development firm, Wicked Global, in Maine. One of Wicked Global’s employees, Greg Dorr, lists on his LinkedIn page his additional employment with Peace Action Maine and Maine Voices for Palestinian Rights. According to the GAI report, 68 percent of all Internet traffic to Obama.com comes from foreign visitors.

GAI notes that the connections between the bundler and the Beijing regime come through China’s state-run media:

Obama.com Purchased By An Obama Bundler In Shanghai, China With Questionable Business Ties to State-Run Chinese Enterprises: In 2008, Obama.com was purchased by an Obama fundraiser living in Shanghai, China, whose business is heavily dependent on relationships with Chinese state-run television and other state-owned entities. (see page 62)

And not surprisingly under these circumstances, more than two-thirds of all traffic to Obama.com comes from outside the US:

68% Of Traffic To Anonymously Registered Obama.com Is Foreign: According to industry leading web analytics site Markosweb, an anonymously registered redirect site (Obama.com) features 68 % foreign traffic. Starting in December 2011, the site was linked to a specific donation page on the official BarackObama.com campaign website for ten months. The page loaded a tracking number, 634930, into a space on the website labeled “who encouraged you to make this donation.” That tracking number is embedded in the source code for Obama.com and is associated with the Obama Victory Fund. In early September 2012, the page began redirecting to the standard Obama Victory Fund donation page

Breitbart promises more about the China connection later, but let’s take a look at the domestic side of Doodad Pro II: Chinese Boogaloo. According to the executive summary of the report, Team Obama disabled the security processes for credit-card transactions designed to detect fraud and other illegal activity — but only on contributions. Those security protocols are fully engaged for merchandise purchases:

Obama Campaign Lacks the Industry-Standard Level Of Credit Card Security For Donations, But Uses It For Merchandise Purchases: To purchase Obama campaign merchandise, the campaign requires buyers to enter their credit card CVV security code, but does not require the credit card security code to be entered when making an online campaign donation (see page 60). By GAI’s estimates, the Obama campaign’s failure to utilize industry-standard protections potentially costs the campaign millions in extra processing fees. (see pages 35 and 59)

There is no other conclusion to reach but that this decision was deliberate, especially since it became an issue just before the 2008 election. The Washington Post reported on it, at least for a brief time, and it became a topic of some interest among Republicans in Congress. Even if one was inclined to chalk it up to error by an inexperienced campaign in 2008, that excuse no longer applies in 2012 — especially not when the campaign seems more concerned about fraud in merchandise sales, which would cost them more in reversals (product costs) than returned donations would.

OFA seems to be taking advantage of a “foreign donor loophole” by not using CVV on their campaign donation page. When you donate online to the Obama campaign using a credit card, the contribution webpage does not require donors to enter a secure CVV number (also known as CSC, CVV2 or CVN), the three-digit securing code on the back of credit cards. This code, although not 100 percent effective, is used to ensure a person making a purchase physically possesses the card. According to the report, 90 percent of e-commerce and 19 of the 20 largest charities in the United States use a CVV code, making its use standard industry practice in order to prevent fraud. Another anti-fraud security measure includes software, better known as an Address Verification System, to verify a donor’s address matches the address on file with the credit card company. The investigation could not determine whether OFA is using this type of software to prevent fraudulent or illegal donations.

Because of the lack of a CVV code requirement, the door is opened for OFA to accept robo-donations, or in other words, large numbers of small and automatic donations made online to evade FEC reporting requirements. Although it isn’t illegal to decline the use of a secure CVV credit card code for campaign donations, it is illegal to accept campaign donations from foreign sources. Campaigns are required under criminal code not to solicit, accept or receive foreign donations in any amount. The Federal Elections Commission doesn’t require campaigns to disclose the names of donors making contributions of less than $200 unless audited. In addition, FEC rules don’t require campaigns to keep records of those giving less than $50. These rules combined with the lack of a CVV numbers make it easy for campaigns to get away with taking foreign donations. …

As of September 26, 2012, the Obama campaign has raised $271,327,755 in contributions under $200 for the 2012 cycle. In 2008, it was $335,139,233. The Romney campaign has raised just $58,456,968 in contributions under $200 and has all CVV and online security measures in place. In total, the Obama campaign raised $500 million online in 2008 with $335 million in contributions–more than half–falling under the $200 reporting requirement. Obama has raised more online funds than any campaign in history. ….

In this situation, the foreign donation problem coming from online sources can be solved and President Obama’s promise of transparency can be kept in one click by enabling all security protections and releasing the names and records on all transactions under $200 to verify Obama for America is a clean campaign operating within FEC law.

Katie drills deeply into this report, and demonstrates that this is no accident. Be sure to read her whole post.

According to CBS, U.S. officials believe Huawei could “intercept high-level communications, gather intelligence, wage cyber war, and shut down or disrupt critical services” in the United States on China’s behalf.

While there is no “hard evidence” for these claims, according to CBS, the possibility has led the Obama administration to interfere with Huawei’s efforts to expand in the United States.

In one case, federal officials convinced Sprint not to sign a $5 billion contract with the company to build a 4G wireless network, CBS reported.

Huawei already maintains a “handful” of networks in rural America, according to CBS, but is trying to gain a bigger foothold with an “army of lobbyists and public relations firms.”

Blowback

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I hope this isn’t the huge explosive scandal we’ve been hearing rumors of.

There are tens of thousands of Americans living in Shanghai alone, and many more in China overall. It shouldn’t be too shocking that some of them are Obama supporters.

I myself, a US citizen living in Shanghai, occasionally send donations to Republican campaigns from China. I’m pretty sure that’s not illegal.

DarkCurrent on October 8, 2012 at 10:46 AM

well yea, but it is illegal for Chinese citizens to do so…am sure they have proof pointing to this aspect, nothing to do with honest American citizens living there and sending donations to either one of the candidates..I lived in the UK for a long time and me and my wife made donations to republican presidential candidates on a regular basis… but this is not what this scandal in the making (if the media will bother reporting) is all about…

When is oba-mao’s total campaign of corruption going to be exposed? I get so tired of the continued Chicago thuggery that is practiced by this administration. Where is Issa? Where is anybody in the most ethical congress evah? Republicans have no balls, they are terrified of the media. God Save America!

The 108-page GAI report found nearly half of Congress, both political parties and presidential candidates, and third-party fundraising groups that funnel money to political parties and candidates were vulnerable to fraudulent and foreign donations. This is a bipartisan problem potentially impacting all levels of government,

It would be very interesting to see the partisan breakdown on all this.

Amazng how we can pass all these new regulations on businesses, but not bother regulating campaign donations wide open to foreign donors in violation of the laws.

The 3-digit CVV security code doesn’t tell you anything about the eligibility of the card holder to vote. They don’t encode any location or citizenship information. It can help reduce general fraudulent use of a valid card number to some extent since it has to match the one paired with the unique card number, but that’s all.

The 3-digit CVV security code doesn’t tell you anything about the eligibility of the card holder to vote. They don’t encode any location or citizenship information. It can help reduce general fraudulent use of a valid card number to some extent since it has to match the one paired with the unique card number, but that’s all.

DarkCurrent on October 8, 2012 at 1:30 PM

It’s a protection against fraud. Removing protections against fraud makes fraud easier. And that’s a very dangerous thing when that fraud can easily be used to evade the laws that exist.

It’s easy to have a program that breaks a $25,000 donation into 1000 $25 donations, which no longer have to be tracked because each donation is assumed to be too small to matter.

So that hypothetical $25,000 donation now looks like 1000 anonymous $25 donations. What beter way for foreigners to be able to make huge donations without their donations even being visible?

Well my night shift here at the Ministry of Information finished over half and hour ago and I have to get up early for my day job where my Obama-loving American expat coworkers will no doubt want to hear my incensed right-wing outrage at this latest scandal. I’ll need to be well-rested.

’cause there really aren’t any legally eligible American voters outside the US and so that’s solid evidence these donations were actually from foreigners, right willie?

DarkCurrent on October 8, 2012 at 2:01 PM

Well, thats the point. I believe your location and story – but fraud protection should be heightened in Federal Elections, per Federal laws for ex-pats living abroad – not a basic – and I mean basic level of “security”

To conclude: Donations are from expats, foreigners or anyone is unvetted, merchandise purchases are not. The difference is the former is pure payola with little or no loss, the latter is a firm purchase to protect costs in the form of a margin. One has strict guidelines per US Voting law.. the other doesn’t.

The lack of a CVV2 field on the Obama for America website is very suspicious. CVV2 is the 3-digit or 4-digit number on the bank of your credit card that you enter for a card-not-present purchase (e.g,, Internet or telephone). CVV2 is required by PCI regulations for all card-not-present transactions to prevent fraud. Failure to submit the CVV2 for a CNP authorization results in the merchant bank laying out huge non-compliance fees.

If a card taker (merchant) doesn’t enforce AVS or CVV2 the credit card transaction is called “non-compliant”. Non-complaint transactions typically have a much higher discount rate than compliant transactions. A typical discount rate for compliant transactions is around 2.4-2.9%. If the card is from overseas it is called “international non-compliant” and it goes even higher; the discount rate can shoot up to 7-10% per transaction.

An intrepid reporting could ask whether Obama’s merchant bank is actually assessing those penalties, or if there is a special agreement in to waive the penalties and if that constitutes an illegal payment-in-kind to the Obama campaign.

We’re talking tens of millions of dollars. It would make the Clinton’s China scandals look like stealing lunch money.

The key to uncovering this scandal is finding the identity of the bank. I’ve been searching high and low since the whole AVS thing broke in 2008 and nobody seems to know.

If it turns out that the mystery bank is actually in Shanghai or China, that would be a worthy news scoop indeed.

It certainly adds important context to the campaign’s announcement that it raised over $180 million in September. The campaign said that over 1.8 million different people donated to the campaign. 98% of these donations were for $250 or less. The campaign doesn’t have to report the names of contributors donating less than $200. With just over 1.7 million people donating an average of $53, the overwhelming majority of the donations aren’t reportable. And a very large number of these donations will be under the $50 threshold where the campaign doesn’t even have to record the donor’s name.

Potentially, hundreds of thousands of individual donations are lost to any kind of security or verification. A “person” could make 1,000 donations of $49 and never be recorded on campaign finance disclosure forms. Their “name” wouldn’t even be recorded anywhere.

Shockingly, almost half the traffic to the Obama campaign website is from foreign sources. More amazingly, Obama.com which simply redirects to the Obama donation page, gets almost 70% of its traffic from foreign sources.